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Drug price control order

Posted AtExpress Pharma Pulse

The task force recommendations
on drug pricing have been under the scrutiny of the
industry, while a new drug policy may be welcome,
industry specialists are more intereseted in the finer
aspect of the policy.The new Drug Pricing Control
Order (DPCO) is all set to replace the present order.
It is designed by taking into account, the recommendations
of the task force for pharma pricing and the Sandhu
Committee. The pharma task force, which was headed
by Pronab Sen, Principal Advisor of the Planning Commission,
has sparked off a series of discussions on what would
be beneficial to the industry as well as the consumers.
Following are some of the recommendations proposed
by the pharma task force for the new DPCO.

Drug pricing

The present price control system, blocks the entry
of new drugs because companies do not have a price
point to enter the market. Discontent with that the
task force suggested a compulsory price negotiation
for all patented drugs before they are approved for
marketing and regulation of prices of 314 essential
drugs. The remaining essential drugs would be brought
under ceiling prices that are not cost-based. The
task force recommended fixing ceiling prices based
on a weighted average of the prices of top three brands
of a drug value.

Conversely the task force proposes no control on bulk
drugs and unbranded formulations, no cost based price
control, making "essentaility" the sole criterion
for selecting drugs for price control or regulation
and selective de-branding in case of prolonged market
dominance of 70 percent or more.

Single Drug Body

An important recommendation of the task force is to
form a National Authority on Drugs and Therapeutics
(NADT) by merging National Pharmaceutical Pricing
Authority (NPPA), Drugs Controller General of India
(DCGI)and the Central Drugs Standard Control Organisation
(CDSCO). The present system, according to an official,
is fragmented and these three bodies are carrying
out multiple and overlapping functions. The DCGI regulates
new drugs, the manufacturing licenses are given by
state drug authorities and pricing is fixed by the
NPPA. The single body will consolidate the processes
and their ownership. The proposal is still being drafted
and though it is still debateable how much action
will be taken, from reports, and based on statements
made by the Union Health Minister earlier this year,
a National Drug Authority is surely on way.

DPCO Act

The Drugs Price Control Order may be replaced with
a new âDrugs and Therapeutic Actâ. Presently,
under the Essential Commodity Act, the punishment
for price violation is imprisonment. In the new act
however, a fee may be levied. That may act as a saviour
for some, and perhaps be more enforceable for the
authorities.

Debranding of generics

The task force has also suggested de-branding as a
means to promote generic medicines, but that is regarded
as an anti-competitive and unsafe strategy by the
industry. "It could lead to growth of spurious and
substandard drugs," says D D Chopra, Adviser Director,
J B Chemicals. Shifting from brand to generics will
take the choice away from doctor to chemist says the
IPA spokesperson. India is not ready for this shift,
says Organisation of Pharmaceutical Producers of India
(OPPI).

The government is negotiating with the industry for
a special pricing of specific drugs like anti-cancer
and anti-retroviral drugs so that their prices are
reduced. For this government is proposing tax concessions
in excise and customs duty on anti-cancer and anti-retroviral
(HIV/AIDS) drugs.

Industry reacts

The Confederation of Indian Industry (CII) pledges
support to the government mission to ensure affordable
medicines. Nevertheless, some of the recommendations
faced disapproval. A commentary released by the CII
on the proposed changes said, "We believe that the
recommendations of the task force on price controls,
debranding and promotion of generics will have very
serious consequences for Indian consumers, pharma
industry and the economy."

According to the CII a pricing policy is likely to
cause unhealthy imbalances. It says that an integrated
policy across all relevant aspects including R&D,
product approvals, pricing should be formulated. De-branding
of products will probably be too sever, instead companies
should be allowed to retain their brands and participate
in government procurement at 50 percent of MRP reserve
price for distribution of inexpensive drugs wherever
required.

CII is of the opinion that the government should initiate
collaborative negotiations with industry for procuring
propreitary drugs, particularly in the areas of HIV
and Cancer.

Indian Pharmaceutical Alliance (IPA) has pointed out
fallacies in the recommendations like mandatory debranding
which is anti-competitive and unsafe and which will
encourage spurious and substandard products. IPA also
questioned the subjectivity of the "essentiality"
as described in the recommendations.

IPA proposes to subject products outside "core" list
under a transparent mechanism for monitoring. Indian
R&D products should be exempted from price control
mechanism.

The policy is a step towards governing the pharma
industry and like all other major policy changes,
it is bound to face bouquets as well as brickbats.
However, the regulatory authority should take into
account the opinions of industry as well so that the
policy becomes a win-win situation for everybody.

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